• Total Operating Revenues: $241.6 million for Q3 2024, a decrease of $30.3 million compared to Q2.
• Adjusted EBITDA: $115.5 million for Q3 2024, a decrease of $20.9 million or 15% compared to Q2.
• Net Income: $9.7 million for Q3 2024, a decrease of $22 million compared to Q2.
• Free Cash Position: $185.7 million at the end of Q3 2024.
• Total Liquidity: Approximately $335.7 million, including undrawn credit facilities.
• Cash Distribution: $0.02 per share, totaling $4.8 million for Q3 2024.
• Share Buyback Program: $20 million committed to buy back shares before the end of 2024.
• Fleet Contracted Through 2025: 78% of the fleet contracted at an average day rate of $148,000 per day.
• Full Year 2024 Adjusted EBITDA Guidance: Updated to be at or above the lower end of the $500 million to $550 million range.

• Warning! GuruFocus has detected 2 Warning Signs with BORR.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Borr Drilling Ltd (NYSE:BORR) achieved strong core operations with a technical utilization of 98.7% and an economic utilization rate of 96.9%.
• The company has secured new contracts at accretive day rates for several rigs, enhancing revenue visibility into 2025.
• Borr Drilling Ltd (NYSE:BORR) completed its newbuild program, resulting in a fleet of 24 premium rigs, the youngest in the industry, providing a competitive advantage.
• The company has a strong liquidity position with approximately $335 million, including cash and undrawn credit facilities.
• Borr Drilling Ltd (NYSE:BORR) continues to return value to shareholders with a quarterly total shareholder return of $25 million, including dividends and share buybacks.

Negative Points

• Q3 2024 results were slightly below the prior quarter due to the absence of one-off benefits that boosted Q2 results.
• There is a risk of contract delays and potential gaps in activity due to market uncertainties and customer caution.
• The company has updated its full-year 2024 adjusted EBITDA guidance to be at or above the lower end of the $500 million to $550 million range.
• Borr Drilling Ltd (NYSE:BORR) faces challenges with delayed payments from Pemex, impacting accounts receivable.
• The jack-up market in specific regions is experiencing uncertainties due to rig suspensions and potential suspensions in Saudi Arabia and Mexico.

Q & A Highlights

Q: How has the dynamic with clients changed regarding tender activity and delays? A: Bruno Morand, Vice President of Commercial and Business Development, explained that while there have been shifts in program timelines, the pipeline continues to grow positively. Some regions, like West Africa and Mexico, have been more stable, while Southeast Asia has seen more competitive behavior. Borr Drilling remains confident in its unique position and expects better utilization for its rigs compared to peers.

Q: Where do you see the strongest incremental demand heading into 2025 and 2026, particularly in the Middle East? A: Bruno Morand noted interesting pockets of activity in the Middle East, such as Kuwait and ONGC resuming contracts. While Aramco's activity levels are currently stable, any increase is likely a second-half 2025 event. West Africa and the Americas, including Mexico, are expected to provide potential demand upside in 2025.

Q: Why did Borr Drilling decide to swap cash dividends for share buybacks? A: CEO Patrick Schorn stated that due to the recent share price decline, the Board decided it was more attractive to buy back shares at low prices, maintaining the gross amount of shareholder returns. This approach allows flexibility in shareholder returns through dividends or buybacks based on attractiveness.

Q: Is the increase in accounts receivable mostly related to Pemex, and what is the current status? A: Patrick Schorn confirmed that Mexico's fluctuating payment patterns have contributed to the accounts receivable increase. Borr Drilling is exploring factoring agreements to monetize receivables and is optimistic about resolving payment issues with Pemex.

Q: What are the expectations for Pemex rigs in 2025, and how does it relate to their capital plans? A: CFO Magnus Vaaler expressed optimism that Borr Drilling's rigs will continue to play a key role in Pemex's operations, given their success in maintaining production levels. The government's commitment to maintaining production suggests potential for increased activity in Mexico in 2025 and beyond.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.